Talga has another competitor - Comet Resources Companies should always be cautious about describing themselves as “unique”, because that usually doesn’t last forever. There is always another company seeking to challenge that status. Talga has described itself as “unique”, calling its orebody “freakish”, but there is a new competitor that has recently surfaced.
Last week I received a visit from Comet Resources, a tiny Perth-based company with a graphite project 150 km from Esperance in WA. It has been drilling the 100%-owned Springdale project, that has demonstrated a 4 km long graphite system. Drilling has been returning some very high grades with intercepts such as 7m at 20.8% TGC and 6m at 22.3% TGC, within broader intercepts that are frequently giving 10% grades.
Initial test work has shown that the orebody is conducive to producing graphene via electrochemical exfoliation, just like Talga’s. Comet has been using the same guys that Talga used in Perth to test its ore as it commences the graphene learning curve. Grade is an important factor, as it is the limiting factor for yields, but the morphology of the graphite and the gangue material is important if the process is going to work. Comet seems to have the right combination. The ore zones don’t seem to be as constant in grades as Talga’s, which may require more selective mining when seeking to produce graphene, but at this stage of the graphene growth cycle it is not important to be boasting large tonnes of resources, as the market is too small to commercialise millions of tonnes.
So, now there are three companies on the same exfoliation path to graphene production. Two of them, Comet and Talga, have grades in the range of 20-25% TGC. They could be shaping up as direct competitors. The third, First Graphite, has a grade of 95%. Being able to achieve 90% conversion to graphene places FGR in the most powerful position as its yield will always be much better. It means larger profit margins and lower capital costs. It will never be able to satisfy 100% of the global demand for graphene but it shouldn’t be trying to. Industry will always want to have multiple sources of an input material such as graphene to ensure reliability of supply and competitive pricing.
The key point for FGR going forward is that it will be the lowest cost producer with the highest profit margins. The market price for graphene will be based on the marginal costs of the higher cost producers when the market becomes more advanced, and that will always be much higher than FGR’s. Companies such as Talga, and now Comet, could be amongst those higher cost producers.
As we look at the emerging graphene companies it is important to remember that if one of these companies make breakthroughs in the applications for graphene, such as deployment in concrete, that same application will be relevant to other suppliers of graphene. At the end of the day it comes down to business efficiency and profit margins. Consumers will always go to the lowest cost supplier.
One final point that needs mentioning is that graphene is defined by the World Graphene Council as have 10 layers or less in thickness. If it is 11 layers or more, it is technically not graphene. It is micro-graphite, that can also carry the label of graphene nano platelets (GNP) if it falls within the range of 11-150 layers thick. Talga seems to be trying to muddy the water when it talks of recoveries of 76% into graphene and GNPs. It is trying to boost the yield that it can present to investors by crossing the boundary, grouping together two different products. That is just not correct. It is not truthful - it is deceptive.
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